TORONTO (miningweekly.com) – A prefeasibility study (PFS) undertaken on project developer Chesapeake Gold’s fully owned Metates silver/gold project, has confirmed the project to be one of Mexico’s largest remaining undeveloped deposits with a potential net present value (NPV) of $3.9-billion.
The PFS found the Metates deposit to hold proven and probable mineral reserves of 18.5-million ounces of gold, 526-million ounces silver and 4.2-billion pounds of zinc.
The mine is expected to produce on average 845 000 oz of gold, 25.1-million ounces of silver and 190-million pounds of zinc, at an average gold equivalent cash cost of $410/oz, net of zinc credits during year two to seven.
The project would have a mine life of 25 years, during which it is expected to produce on average 659 000 oz of gold, 15.9-million ounces silver and 143-million pounds zinc, with an average life-of-mine gold-equivalent cash cost of $489/oz, net of zinc credits.
The Metates operation would be constructed at a capital cost of $4.36-billion, including $631-million in contingency costs and excluding sustaining capital costs of $584-million.
At base-case metals prices, the pretax capital payback is expected to be in 4.2 years and on an after-tax basis it would take 5.1 years.
The NPV was calculated using an 8% discount rate, and generated an internal rate of return (IRR) of 20.5%. The after-tax NPV is $2.36-billion and the IRR is expected to be 16.2%.
"We are very pleased that the PFS confirms the Metates project hosts one of the world's largest undeveloped gold and silver reserves in a mining-friendly jurisdiction. The PFS demonstrates the project has excellent economics while meeting the industry's highest environmental standards,” Chesapeake president Randy Reifel said.
The PFS contemplates a conventional truck-and-shovel openpit mining operation with a nominal 120 000 t/d throughput. Crushed ore would be fed to a conventional semiautogenous grinding mill and ball mill circuit followed by a single-stage flotation plant to produce a bulk sulphide concentrate.
The comminution and flotation circuits would be built as two separate lines, each rated at a nominal 60 000 t/d rate to allow for ramp-up and to decrease operational risks. Tailings from the flotation concentration plant would be dry filtered to remove water and then co-disposed with the waste rock in a dedicated storage facility.
The sulphide concentrate would be transported downhill through a 126-km-long slurry pipeline to the Ranchito treatment site, located 800 m lower in elevation and south-west of Metates. The pipeline would follow an all-weather access road that would be constructed between the Metates and Ranchito sites.
Ranchito is situated beside a major limestone resource and close to key mine infrastructure, including power, water and transportation as well as labour.
At Ranchito, the sulphide concentrate would be treated in a pressure-oxidation plant with subsequent cyandiation and Merrill-Crowe recovery of gold and silver dore.
High-purity oxygen to feed the pressure-oxidation plant would be manufactured on site in a dedicated plant owned and operated by a third party and provided under an "across the fence" arrangement.
Acidic solutions from the pressure oxidation process would be neutralised with ground limestone and lime produced from an on-site quarry and then co-disposed with the cyanide leach tailings in an adjacent storage facility.
Zinc would be recovered from the pressure oxidation solutions through solvent extraction/electrowinning methods to produce special high-grade zinc ingots.
Overall gold recovery from ore through dore production is expected to be 89% and for silver 76%. Overall zinc recovery to high-grade ingots is estimated at 85%.
The company also has exploration properties in the US and Guatemala.
Chesapeake Gold’s TSX-V-listed shares closed up a percentage point at C$9.45 apiece on Friday.